Interest on Loan for Certain House Property (80EEA)

Section 131 — Interest on loan for certain house property (loans sanctioned in 2019-22)

Section 131 continues 1961 s. 80EEA. An individual not eligible under s. 130 may deduct interest on a loan from a financial institution taken to acquire a residential house property, up to Rs 1.5 lakh a tax year, where the loan was sanctioned between 1 April 2019 and 31 March 2022, the stamp duty value of the property did not exceed Rs 45 lakh, and the individual owned no residential house property on the date the loan was sanctioned (s. 131(1) and (2)). The sanction window has closed, so the section now governs only interest on loans sanctioned in that period.

Interest allowed under s. 131 is not deductible again under any other provision, such as s. 22(1)(b) (s. 131(3)). The deduction is in Chapter VIII, which the new tax regime excludes (s. 202(2)(a)(xii)).

POINTS TO NOTE

(i) The conditions are tested on the date the loan was sanctioned. (ii) The Rs 1.5 lakh limit is separate from the Rs 2 lakh limit in s. 22(2) on interest for a self-occupied property, but the same interest is deductible only once (s. 131(3)). (iii) Sections 130 and 131 cannot both apply to one individual: s. 131 is open only to an individual not eligible under s. 130.

CROSS-REFERENCES

• Section 130 — loans sanctioned 1-4-2016 to 31-3-2017 (up to Rs 50,000).
• Section 22 — interest on borrowed capital, and the Rs 2 lakh limit in s. 22(2).
• Section 202 — the new tax regime, which excludes Chapter VIII deductions.